Peter E. Baer (defendant) was an attorney admitted to practice law in Oregon. His wife became interested in buying a house, and Baer offered to handle the necessary legal work. The owners of the house, the Petersons, believed that Baer was representing both his wife and them as clients. In fact Baer represented only his wife’s interests, but merely told the Petersons that they could hire another attorney to review his work. Baer also acted as the escrow agent for the transaction. The parties came to an agreement that Mrs. Baer would make a down payment and assume the mortgage on the house, and then pay the remaining balance by April 2, 1981. The transaction went according to plan until Mrs. Baer was unable to pay the remaining balance. Peter Baer had told the Petersons that they would get their house back if the balance was not paid in a timely fashion, but when they tried to repossess the house, Mr. Baer told the Petersons that Mrs. Baer owned a part interest in the house and that the Petersons would need to sell the house and reimburse Mrs. Baer. The Petersons hired an attorney, who informed Peter Baer that he had a severe conflict of interest and should settle the matter. Baer responded by filing suit against the Petersons in both state and federal court. He was then subjected to disciplinary proceedings by the Oregon State Bar (plaintiff). The Bar’s Trial Board found him guilty of failing to refuse employment when his interests could impair his independent professional judgment, having improper business relations with a client, and accepting and continuing employment when the interest of another client could impair his independent professional judgment. The Trial Board’s recommendation was a public reprimand and a requirement that Baer pass a legal ethics examination. The Disciplinary Review Board affirmed the findings and agreed with the ethics examination requirement, but recommended a 30-day suspension from the bar. Baer appealed to the state supreme court.